The Renewable Fuels Association today provided a significant amount of firepower to those who think we need to proceed with great caution when trying to track indirect land use impacts caused by U.S. ethanol production. In its new research paper, the organization made several things clear:
Growth in ethanol production has not significantly driven land use changes
Increased production reduces the amount of land needed for agriculture
Agricultural land use can expand without jeopardizing forest or other sensitive lands
Models used to predict future agricultural land use changes have limitations
Ethanol feed coproducts mitigate land use change
U.S. corn and soybean exports remain strong while biofuels production grows
A group of ethanol producers has announced the launch of their new organization, Growth Energy, with the release of a policy brief and an ad campaign to set the record straight on food prices. The campaign comes at a time when corn prices have decreased by more than fifty percent and oil prices have been tumbling, while food prices continue to soar.
“Big Food and their Washington lobbyists have been trying to blame the rising cost of food on American ethanol producers and the cost of corn. Well, now that the price of corn has dropped more than fifty percent since the summer, we ask the Big Food industry to explain to the American people why food prices are still so high,” said Jeff Broin, CEO of POET. “The lies the Big Food lobby has been spreading about clean, green biofuels have finally been exposed as an intellectually dishonest smear campaign. It’s wrong and we’re coming together to ask Big Food to give struggling Americans a break.”
The cost of food has increased at the brisk clip of 7.6 percent in the past year, the worst rate in nearly twenty years, and has continued to increase while the cost of corn and other commodities have fallen in the past four months. The Bureau of Labor Statistics reports that the price of basic foods in the United States is currently rising at twice the rate of inflation and is expected to continue to rise in the future. Milk prices increased by 13.3 percent; cheese by 12.5 percent; eggs by 29.9 percent; and bread by 14.7 percent from March 2007 through March 2008. Big Food is sowing profit growth from these higher prices. Kraft’s revenues increased nearly 20 percent from the year-earlier period and saw net income shoot up in the third quarter to $1.4 billion. Sales at Kellogg’s climbed 9.5 percent and third-quarter net income increased to $342 million, up from $305 million the year earlier.
The honeymoon of high commodity prices looks to be over for the moment, according to Terry Francl, senior economist with the American Farm Bureau Federation.
He says that corn and soybean farmers will likely have to wait until the first of the new year for any rally in prices,
The latest USDA World Agricultural Supply and Demand Estimates (WASDE) projects the 2008/2009 season average farm price for corn at $4.00 per bushel to $4.80 per bushel, compared to $4.25 per bushel to $5.25 per bushel in October. “This decline has been driven by the decline in oil prices and concerns about the financial and equity markets,” Francl said.
“Crude oil prices will continue to be a critical factor impacting both corn and soybean prices,” Francl said. “Consequently, the post-harvest seasonal price rally may be somewhat moderate this year. However, as the new year approaches, more competitive bidding for 2009 acreage is expected to boost crop prices.”
The AFBF economist also paints a subdued outlook for the ethanol market in the months ahead. The WASDE November report pegs corn used for ethanol production at 4 billion bushels in 2008/2009. “Although an increasing renewable fuel standard will bolster demand, ethanol plants are going to continue to struggle until crude oil and gasoline prices recover.”
Very soon corn cobs will be used for much more than pipes. How about cellulosic ethanol production? That’s what POET, one of the largest producers of of ethanol, has in mind. They had me up to their Project LIBERTY field day in Emmetsburg, IA to see some prototype equipment that many of the ag OEM’s are designing to harvest and collect corn cobs. It’s estimated that harvesting the cobs could add eleven percent to the amount of ethanol an acre of corn can yield. That sure increases efficiency!
I wondered what you would have to do though to harvest, collect and deliver the cobs since you need to separate them from the corn itself. Well, apparently all you need to do is pile it up at the edge of your corn field! Then a company like POET can just come by and pick it up.
They did a lot of research on this and the cobs hold up well just piled out on the field until heading to the plant. POET says it will have their Emmetsburg plant in full corn cob cellulosic production by 2011 so this isn’t far away.
If you’d like to hear more about it then listen to my interview with Jim Sturdevant, Director of Project LIBERTY, here:
The latest numbers on ethanol production and demand nationwide show continued growth.
The Renewable Fuels Association reports that demand continued to outpace production, with production averaging 647,000 barrels a day and demand calculated at 661,000.
RFA notes that the growth in ethanol production in August came amid declining corn prices that today are half of what they were at their peak in late June, which “erodes the argument of livestock, poultry and food processing companies that have argued ethanol is responsible for the dramatic increase in food prices. It also calls into question the reports from groups such as the World Bank, the United Nations and others that US ethanol production is responsible for high corn prices.”
“Wouldn’t it be wonderful if we could take a product that’s currently produced by the petrochemicals industry and find a competitive peer for it—one that’s renewable, competitive and green?”
The answer to that question, posed by National Corn Growers Association Vice President for Research and Business Development Richard Glass, should be a resounding “heck, yeah!”
This little molecule, Ethyl lactate, is a general all-purpose solvent as well as a common ingredient in pharmaceutical preparations, food additives and fragrances. It is typically derived from petrochemicals. However, using a reactive distillation process allows a cost-effective way to produce it from ethanol – hence providing a significant non-fuel revenue stream for ethanol plants. “If all you produce from a biorefinery is ethanol, that is fine for a nascent industry but, in essence, all you have is a one-trick pony,” Glass said. “My dream is the integrated biorefinery where the only limits are your imagination and the ability to make the system utilize all components of the production output.”
An article in Biomass magazine outlines some of the work being done by the NCGA and a team from Michigan State University. According to the article, ethyl lactate is not widely used today because of its high cost, but has applications in the electronics industry for micro-circuit fabrication, mainly because it’s a clean solvent. In 2007, the cost of producing ethyl lactate was between $1.30 and $1.60 a pound. MSU and NCGA researchers were able to cut that cost by half using a process called reactive distillation.
More and more, the food “versus” fuel debate is being proved for the lie it was. There never was a strong connection between ethanol demand and retail food prices. Here are a few more obituaries, if you will, for this discussion.
“While food processors were willing and able to immediately blame ethanol and rising corn prices for having to increase retail food prices, they won’t be extending the same courtesy by lowering those prices with lower corn and oil prices.”
“… those who blamed biofuels for pushing up prices of major grains made a problematic mistake. The more cautious (and often less noisy) experts – like the Wageningen University’s agrocommodity specialists – were correct, when they said biofuels played a ‘marginal’ role at best.”
The Illinois Corn Growers Association has released two landmark studies which conclude that production of ethanol leaves a smaller carbon footprint than gasoline and has substantial room for growth without affecting corn supply to the food and feed sectors.
“The conclusions of these two scientific studies are historic,” said Rob Elliott, vice president of the ICGA. “Amid the long and sometimes heated debate between ethanol proponents and detractors, these studies indicate that modern ethanol plants have a superior carbon footprint and net energy benefit when compared to gasoline refineries,” Elliott said. “Equally significant are the findings of the two studies we are releasing today which indicate clearly the promise of modern ethanol technology. They should put to rest the myth that ethanol is less environmentally friendly than the manufacture of gasoline. They also provide a compelling argument that corn growers will be able to produce sufficient supply to meet food, feed and renewable fuel requirements over the next two decades.”
The studies’ authors were Ross Korves, economic policy analyst at ProExporter Network, and Dr. Steffen Mueller, principal research economist at the University of Illinois at Chicago’s Energy Resources Center. Both studies can be downloaded from ICGA here.
USDA has been trying to get the message out that they are not bailing out ethanol plants that lost money speculating on commodity markets this year.
The problem started when Secretary of Agriculture Ed Schafer told members of the press at the World Food Prize symposium in Des Moines that some ethanol plants might be eligible for loans through USDA. “There is going to have to be some credit applied to companies to buy some lower-priced corn to blend with their higher-priced corn obligations,” Schafer said.
Reaction from the livestock industry was swift and angry. Eight major livestock organization leaders wrote to the secretary protesting what they viewed as preferential treatment for the ethanol plants. “Many of our producer and processor members also took long positions on corn and soybeans and are paying above-market rates right now,” they wrote. “We in animal agriculture are particularly concerned that you would consider adding one more level of support for the corn-based ethanol industry.”
So, Schafer met with those groups today to try and explain the USDA’s Business and Industry Loan Guarantee Program. “We walked through the B&I loan guarantee program, which has been used by their memberships, and we assured them that this was a long-standing program that we would use to help finance businesses in rural America, some of them may be ethanol facilities,” Schafer said.
Schafer notes that the loan program is there for the livestock industry as well. “And we’re going to pass along the elements of the Business and Industry loan guarantee program to them that they can pass out to their members.”
No word from the livestock industry on whether they would consider that a “bail out.”
The premiere event will feature the NSU Wolves facing Northern Sun Intercollegiate Conference rivals the Augustana Vikings on November 8 at Clark Swisher Activities Complex in Aberdeen, S.D.
“Northern State looks forward to celebrating a growing industry in our region and enjoy some great NSIC football,” said Bob Olson, NSU Athletic Director.
“Big Food and their Washington lobbyists have been trying to blame the rising cost of food on American ethanol producers and the cost of corn. Well, now that the price of corn has dropped more than fifty percent since the summer, we ask the Big Food industry to explain to the American people why food prices are still so high,” said Jeff Broin, CEO of POET. “The lies the Big Food lobby has been spreading about clean, green biofuels have finally been exposed as an intellectually dishonest smear campaign. It’s wrong and we’re coming together to ask Big Food to give struggling Americans a break.”
The latest USDA World Agricultural Supply and Demand Estimates (WASDE) projects the 2008/2009 season average farm price for corn at $4.00 per bushel to $4.80 per bushel, compared to $4.25 per bushel to $5.25 per bushel in October. “This decline has been driven by the decline in oil prices and concerns about the financial and equity markets,” Francl said.
Very soon corn cobs will be used for much more than pipes. How about cellulosic ethanol production? That’s what 
I wondered what you would have to do though to harvest, collect and deliver the cobs since you need to separate them from the corn itself. Well, apparently all you need to do is pile it up at the edge of your corn field! Then a company like POET can just come by and pick it up.
The latest numbers on ethanol production and demand nationwide show continued growth.
The answer to that question, posed by National Corn Growers Association Vice President for Research and Business Development Richard Glass, should be a resounding “heck, yeah!” 
“The conclusions of these two scientific studies are historic,” said Rob Elliott, vice president of the ICGA. “Amid the long and sometimes heated debate between ethanol proponents and detractors, these studies indicate that modern ethanol plants have a superior carbon footprint and net energy benefit when compared to gasoline refineries,” Elliott said. “Equally significant are the findings of the two studies we are releasing today which indicate clearly the promise of modern ethanol technology. They should put to rest the myth that ethanol is less environmentally friendly than the manufacture of gasoline. They also provide a compelling argument that corn growers will be able to produce sufficient supply to meet food, feed and renewable fuel requirements over the next two decades.”
The problem started when Secretary of Agriculture Ed Schafer told members of the press at the World Food Prize symposium in Des Moines that some ethanol plants might be eligible for loans through USDA. “There is going to have to be some credit applied to companies to buy some lower-priced corn to blend with their higher-priced corn obligations,” Schafer said.
The 